Question

Tom and Lynda own Hercules Health Club. They provide the following information regarding their expected inventories of supplies and other materials.


Tom and Lynda also inform you that the monthly individual membership fee is $100 and the family fee is $160. Hercules offers a 10% discount if a member pays the entire year’s fee in a lump sum. About 180 individuals and 60 families take this offer. The number up for renewal is spread evenly through the year.
Hercules pays for 60% of its purchases during the month of the purchase, and the remainder the next month. Other variable costs (paid in cash) amount to $25 per month for individuals and $45 per month for families. Hercules also incurs $41,000 (including $12,500 in depreciation) toward fixed costs each month. Finally, Tom and Lynda inform you that they have to pay $20,000 toward the purchase of new equipment in September, and take out $15,000 each month as their profit.
Hercules began August with a cash balance of $6,000.

Required:
Prepare a cash budget forSeptember.


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  • CreatedFebruary 20, 2013
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